A+ An Analysis of Li Ka-Shing
Li is currently chair of two conglomerates which includes: Cheung Kong (Holdings)
Limited and Hutchison Whampoa Limited (HWL). The focus of this analysis will be on
HWL (the larger of the two conglomerates) as well specifically, its Hong Kong Ports and
related services division which generated 45 percent of HWL‟s annual revenue (HWL,
2011). With Asia‟s rapid expansion and development into the international market the
port industry plays an important role in connecting Asia with the rest of the world and in
maintaining its global competitiveness.
- Economic conditions: Hong Kong‟s GDP is US$260.471 billion (2011
estimates) and its real GDP growth is approximately 2.6% (Global Finance,
- Technology: being in a technological industry it will continue building up its IT
systems to meet market and customer needs. For example, areas for
technological developments includes introduction of Electronic Data Interchange
(EDI) service to customers, improving its systems and operational efficiency, as
well its online services to meet market demand. In addition, technology will play
the greatest role in three areas which includes: training, technical assistance and
research (Teng and Xiang, 2007).
- Societal and Demographics: Hong Kong lies at the mouth of the Pearl River
Delta while strategically located to China and neighbouring Asian countries. Its
main focus is its manufacturing industries. As well, foreign investment are
growing rapidly for example, foreign direct investment is up 17% from 2010 to
2011 (HKTDC, 2013). All this will boost the size workforce of the cargo flow in the
- Population demographics: Hong Kong‟s population is approximately 7.17
million (2012) with a 0.1% growth (Global Finance, 2012).
1 - Legislations and regulations: Hong Kong is a free trade port while, regulations
were tighter since 911 adding some uncertainty to custom procedure.
- Suppliers: The bargaining power of supplier is low because the industry is
relatively old therefore, raw material and technology from suppliers are cheap.
Moreover, there are many suppliers and a low switching cost.
- Rival firms: there is high competition among current rival firms because industry
growth is slow, there is high fixed cost, as well there are low switching costs for
buyers and competitors provide standardized services. In addition, the ports such
as Hong Kong and Singapore will face increasing competition as other facilities –
notably Shanghai and South China – are established and expansion to take
share of regional transshipment trade. Similarly, the ports of Singapore will face
increasing price competition, as other facilities – notably Tanjung Pelepas in
Malaysia – are established and expansion to take a share of the regional
- New entrants: Is very low because very high barrier of entry, huge amount of
money have to be invested, high land cost in Hong Kong, high human costs for
skilled workers and high exit barrier.
- Buyers: The bargaining power of customers are high because the top 10
customers contribute to more than 80 percentage of the volume therefore, they
have high bargaining power. Buyers also have low switching costs.
- Substitute products: Substitute products are medium because Hong Kong
faces competition from lower cost ports namely Kaohsiung Taiwan.
- Strengths: Its core strengths are its good freight transportation infrastructure,
there is good efficiency and reliability of terminal operation (i.e. Hong Kong can
operate more than 40 gantry crane moves per hour), and also Hong Kong‟s
financial institutions are recognized globally.
- Weakness: Hong Kong has been criticized as having one of the highest terminal
charges (i.e. tariff taxes) compared to bordering ports including China and
Taiwan as well, having a bottleneck border crossing.
2 Drivers of Change
- Increasing international lines therefore, increasing frequency of services through
Hong Kong (i.e. increasing throughputs – a common measure in the port
- Increase IT spending
- Maintain/increase market share via responsiveness to customers request and
Industry Key Success Factors
- Geographic advantage
- Reputable brand image
- High efficiency
- Dominant Market Share
Li Ka-shing, ranked 8 according to Forbes magazine richest billionaires has
both strengths and weaknesses. Li was born in Chaozou province China in 1928. He
was born in a poor family which fled China to go to Hong Kong in 1940 because of the
Japanese invasion. One of his strengths that made him an entrepreneur was that he
was opportunity driven. Despite the conflict that was happening in China and the
death of his father, in 1950, he decided to start a manufacturing company that was
focused on high quality plastics. He decided on this by doing research, watching the
news as well learning how to operate a plant. He then used both his personal savings
as well as borrowed money from his family and friends to create his first company.
Through his struggles, one of his early weaknesses was his sacrifice of
education for business. His lack of formal education prevented him from following his
father‟s footsteps as a school headmaster. Instead, one of his first jobs he took was a
sales man, selling watches at his uncle's store in Hong Kong.
3 Another strength that Li possessed was his leadership and management style.
He was known for his work ethics. For example, while others worked eight hours a day,
he would work sixteen. His daily routine would consist of waking up at 6:30 am every
morning and working till 6:30 at night and quite often, he would work twelve to sixteen
hours a day. Moreover, another strength in his management style he was known for
was his decisiveness yet strategic personality. For example, when he was operating his
plastic company, he would look to hire the best specialist he could find. Through that, he
was able to differentiate himself from competitors by having the best quality products
(thereby, he recognized quality was directly related to perceived value). He eventually
became one of the biggest exporters of plastics in Asia as well developed strong
international ties for his quality known products.
A weakness in his management style (more evident in h